Correlation Between Delta Air and Cinemark Holdings
Can any of the company-specific risk be diversified away by investing in both Delta Air and Cinemark Holdings at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Delta Air and Cinemark Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Delta Air Lines and Cinemark Holdings, you can compare the effects of market volatilities on Delta Air and Cinemark Holdings and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Delta Air with a short position of Cinemark Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Air and Cinemark Holdings.
Diversification Opportunities for Delta Air and Cinemark Holdings
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Delta and Cinemark is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Delta Air Lines and Cinemark Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cinemark Holdings and Delta Air is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Delta Air Lines are associated (or correlated) with Cinemark Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cinemark Holdings has no effect on the direction of Delta Air i.e., Delta Air and Cinemark Holdings go up and down completely randomly.
Pair Corralation between Delta Air and Cinemark Holdings
Considering the 90-day investment horizon Delta Air is expected to generate 1.79 times less return on investment than Cinemark Holdings. But when comparing it to its historical volatility, Delta Air Lines is 1.21 times less risky than Cinemark Holdings. It trades about 0.02 of its potential returns per unit of risk. Cinemark Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,598 in Cinemark Holdings on January 24, 2024 and sell it today you would earn a total of 188.00 from holding Cinemark Holdings or generate 11.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delta Air Lines vs. Cinemark Holdings
Performance |
| Timeline |
| Delta Air Lines |
| Cinemark Holdings |
Delta Air and Cinemark Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Air and Cinemark Holdings
The main advantage of trading using opposite Delta Air and Cinemark Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Air position performs unexpectedly, Cinemark Holdings can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Cinemark Holdings will offset losses from the drop in Cinemark Holdings' long position.| Delta Air vs. American Airlines Group | Delta Air vs. Southwest Airlines | Delta Air vs. JetBlue Airways Corp | Delta Air vs. Spirit Airlines |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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